The present work involves fabrication of PNIPAM-based terpolymeric hydrogel magnetite (Fe2O3) composite, i.e. ferrogels by coprecipitation method. The effects of Fe2O3 particles on the properties of resulting hydrogels were examined in terms of swelling studies at different temperatures, deswelling kinetics, mechanical and separation behaviour. The ferrogels were found to have higher equilibrium swelling percentage than conventional hydrogels. This shows that the thermoresponsive behaviour of the FeNTA233, FeNTH233 and FeNTM233 remains unchanged and having a range of phase transition temperature. It was observed that the ferrogels exhibited higher rate of swelling than the conventional hydrogels. FeNTA233, FeNTH233 and FeNTM233 showed non-Fickian type of diffusion. Deswelling study showed that ferrogels exhibited the faster shrinking rate and lost water dramatically. Thermogravimetric studies of ferrogels in air atmosphere were carried out to reveal the kinetics and mechanism of the thermal decomposition reaction through Coats–Redfern calculation and deconvolution procedures. The values of the apparent activation energy E and pre-exponential factor A in Arrhenius equation were calculated. Also, incorporation of magnetite particle increased the storage moduli and compression moduli of ferrogels by reinforcement of network structure. But, it was found that the separation efficiency of ferrogels reduced from the conventional hydrogels.